Lodi revival / A new generation of grape growers is going into business for themselves

W. Blake Gray, Chronicle Staff Writer

Published 4:00 am, Friday, January 5, 2007

Photo: Kat Wade

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The Ghost vineyard has some of the oldest vines in the county in Acampo near Lodi on December 13, 2006.
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The Ghost vineyard has some of the oldest vines in the county in Acampo near Lodi on December 13, 2006.
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(RIGHT to left) David J. Phillips owner/Winegrape grower, sales and marketing and Michael J. Phillips owner/Director of Winemaking and for Michael David Vineyards meet with grower Kurt Kautz and winemaker Craig Rous to taste some wines in their Farm Cafe restaurant in front of their vineyards in Lodi on December 21, 2006.
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(RIGHT to left) David J. Phillips owner/Winegrape grower, sales and marketing and Michael J. Phillips owner/Director of Winemaking and for Michael David Vineyards meet with grower Kurt ... more

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Michael J. Phillips owner/Director of Winemaking and David J. Phillips owner/Winegrape grower, sales and marketing for Michael David Vineyards, pose on a tractor in their vineyards in Lodi on December 21, 2006.
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Michael J. Phillips owner/Director of Winemaking and David J. Phillips owner/Winegrape grower, sales and marketing for Michael David Vineyards, pose on a tractor in their vineyards in Lodi ... more

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Rodney Schatz owner of Peltier Station Winery, poses in his vineyards in Lodi on December 13, 2006.
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Rodney Schatz owner of Peltier Station Winery, poses in his vineyards in Lodi on December 13, 2006.
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Enologist Barry Gnekow tastes in the lab at Jewel Collection Winery in Acampo near Lodi on December 13, 2006.
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Enologist Barry Gnekow tastes in the lab at Jewel Collection Winery in Acampo near Lodi on December 13, 2006.
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Lodi revival / A new generation of grape growers is going into business for themselves

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It sounds like Depression-era advice: to save the farm, you gotta start a winery.

In fact, it's the 21st-century lesson Michael and David Phillips of 7 Deadly Zins fame have for their fellow farmers in Lodi.

Only 80 miles from San Francisco, Lodi (San Joaquin County) is the backbone of the California wine grape-growing industry, and has been for decades. It leads the state in production of Cabernet Sauvignon -- with more than twice as much as Napa County -- as well as Chardonnay, Merlot and Sauvignon Blanc, according to the Lodi-Woodbridge Winegrape Commission.

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About 44 percent of the state's Zinfandel is grown in Lodi, dwarfing every other region, and much of it comes from some of the state's oldest vines.

Yet times are hard for Lodi farmers. Content for decades to sell their grapes to large wineries like E. & J. Gallo Winery and Woodbridge by Robert Mondavi, farmers have discovered that consolidation in the wine industry eliminated their negotiating leverage and endangered their livelihood. Grape prices have dropped by half in the last five years, according to Stuart Spencer, program manager of the winegrape commission.

Lodi grapegrowers want to be in the big leagues with Napa and Sonoma counties, fussing over small crops for wineries that can charge a premium bottle price for precision viticulture. But the humongous wine companies that have emerged from the industry's recent buying and merging frenzy prefer to keep Lodi fruit as a nice little step up -- price-wise and quality-wise -- from the nearby Central Valley.

However, if farmers don't earn more money from their crops, the farms might disappear. Caught between fast-growing Stockton and Sacramento, Lodi faces development pressure, because farmland rarely brings the same return on investment as housing.

"We're feeling a little squeezed," says David Phillips, co-owner of Michael-David Vineyards. "Lodi has a special identity that we want to preserve. We don't want to turn into Orange County."

Michael-David has provided an inspirational example of how to stave off development by making agriculture more valuable. Frustrated by low prices for their wine grapes, the Phillips family morphed in less than five years from farmers running a roadside fruit stand into moguls selling 200,000 cases annually of wines with clever brand names like Earthquake and 6th Sense. And in the spirit of Lodi, they still have the fruit stand.

Unlike Napa, Lodi is not a monoculture strictly devoted to wine grapes. San Joaquin County leads the state in producing apples, asparagus, blueberries, cherries, corn and walnuts, according to the California Agricultural Statistics Service.

But wine grapes, which potentially earn way more than other crops, are the key to Lodi's economy, and the reason there's a big Wine & Visitor Center in town instead of, say, an Asparagus & Visitor Center.

The center showcases many of the small-production wines now being made by Lodi farmers. This twist is the latest in the 150-year history of wine grape growing in Lodi. The region is as old as any in California, but throughout most of its history growers have concentrated on quantity rather than quality.

Lodi's wine grape industry survived Prohibition better than most because growers were close to main railroad lines and could quickly ship their freshly picked grapes to the East Coast, where their Zinfandel was a big hit with home winemakers. (Home winemaking was legal.)

However, shortly after Prohibition ended in 1933, growers organized into co-ops, thinking this would give them greater marketing strength. It turned out to be a huge mistake that quickly undermined the area's reputation. And instead of fostering harmony, co-ops encouraged individual members' greed.

"What happened is, when you have a good crop, the growers would sell their grapes for cash," says Rudy Maggio, a former member of the giant Eastside Co-op, which was founded in 1934, and now one of three owners of Oak Ridge Winery, which bought the once-decrepit facility in Lodi. "When they couldn't sell it, they'd bring it to the co-op. The co-op had no control."

The potential to grow good grapes has always been there, although whether Lodi can be as great a growing region as Napa Valley -- which local farmers like to use as a comparison -- is questionable.

Purely based on high temperatures, Napa Valley and Lodi have very similar climates. David Akiyoshi, former director of winemaking at Woodbridge by Robert Mondavi, points out that according to Sunset magazine's "Western Garden Book," a popular reference for gardeners, Lodi and Napa Valley have the same climate zone. (Zone 14, called "Northern California's inland areas with some ocean influence," also includes much of Sonoma Valley as well as Tracy, Manteca and Modesto.)

However, UC Davis viticulturist Andy Walker says that measures like degree days -- a popular way to compare climates, based on high temperatures -- "underestimate the climate" of Lodi.

"What it doesn't take into account is the duration of that heat," Walker says. "Calistoga is as hot as Lodi but it drops away quickly at night."

Lodi does get cooling delta breezes that distinguish it from the much hotter Central Valley to the south, Walker says. But heat is not the region's largest challenge.

Farmers moved to Lodi during the Gold Rush for a very good reason: deep, fertile soil. Unfortunately, premium wine grapes are generally grown in shallow, nutrient-poor soil.

It took Robert Mondavi, California's wine visionary in so many ways, to see Lodi's potential. Mondavi grew up in Lodi and was president of his class at Lodi Union High School in his senior year, according to his autobiography "Harvests of Joy" (Harcourt, 1998). But he acted as though he couldn't get away fast enough, moving to St. Helena soon after graduating from Stanford in 1936.

Mondavi was synonymous with Napa Valley by the time he returned to Lodi in a business sense, in 1979. Needing someplace to make cheaper wines than the ones he was turning out in Oakville, he bought a large facility just outside the city of Lodi. He then put his staff to work on figuring out how to make the most of the area's bounty of grapes.

Mondavi's influence

"Bob Mondavi taught us how to be winegrowers," says Randall Lange, co-owner with his twin brother Bradford of LangeTwins winery. "Mondavi would take every individual block of our wine grapes and kept them apart. I could taste the wine in the spring and make adjustments in the vineyard. We were Zinfandel farmers. That's what we did. It turned out we had a very good Cabernet vineyard."

Mondavi, who paid a premium for the best grapes and established long-term relationships with growers, remains popular in Lodi.

But Robert Mondavi Winery was bought by Constellation in 2004. Constellation had previously bought Blackstone Winery, Estancia Winery, Ravenswood and Simi Winery, which had also been well-paying buyers of Lodi grapes.

"Every time I had a winery client, Constellation would buy them," says Rodney Schatz, chairman of the California Association of Winegrape Growers. "It hurts when you have worked hard to create a product and you can't even sell it to your own wineries at a price where you can survive."

Constellation and Gallo make up 50 percent of the market for grapes, Spencer estimates. "Consolidation has really squeezed the growers," he says. "You develop strong relationships with individuals and companies like Mondavi that really value the grower relationship. Now all that's gone."

Brad Alderson, general manager and vice president of Woodbridge by Robert Mondavi, has worked at the company since 1975 and wrote Lodi's application to become an American Viticultural Area in the 1980s. He says lower grape prices offered by Constellation are a necessity caused by global competition.

"The vast majority of wines made in Lodi are sold for between $6 and $10," Alderson says. "That's where the growth in the industry is. If you don't have the wine at that price, somebody else will. Grape growers don't see how competitive it is on the shelf. We have meetings with the growers to explain that. It's not always what they want to hear."

Alderson says grape gluts in Australia and Europe directly affect the prices paid for Lodi grapes. Yet no foreign vineyard can compete with Lodi in its area of greatest strength: ancient Zinfandel vines. Lodi's first vineyards were planted in the 1850s and some century-old vineyards are still producing crops.

With a dozen clients in the area, Gnekow is the patron saint of modern Lodi family wineries. On each of his regular weekly visits from his San Francisco home he drops in on several, doing everything from advising farmers on which winemaking equipment to buy to helping inexperienced winemakers deal with unexpected aromas in their still-fermenting wine.

A Stockton native, Gnekow worked as a grocery clerk in Lodi while in high school before going to UC Davis to get a master's degree in enology. He spent 10 years as winemaker for J. Lohr Winery in San Jose, also founding the alcohol-free winery Ariel. Gnekow sold his interest in Ariel in 1996 and was briefly involved in a custom crush business, making wine for vintners that have no facility of their own. Afterward he was at loose ends, and had a respect for Lodi grapes founded from his experience in buying them for J. Lohr.

In something like a vineyard version of "Antiques Roadshow," Gnekow finds gems all the time in the area, and not just Zinfandel. Recently at his urging, ampelographers (grape variety specialists) from UC Davis discovered that a vineyard with grapes that the owner had been selling cheaply to East Coast home winemakers was actually 110-year-old Cinsault vines.

"I called Randall Grahm (of Bonny Doon Vineyard) and he was in tears," Gnekow says. "He didn't know there was a 110-year-old Cinsault vineyard in California. They were selling it off for $90 a ton; he's paying 10 times that now."

There would be even more old vines lingering in Lodi, but giant wineries have usually been less interested in history than current affairs.

"Gallo's marketing guys will be sitting around in a room saying, 'We're going to sell a boatload of Pinot Grigio,' " Gnekow says. "The growers say, 'Sure.' ... That's how vineyards get pulled out that should be historical monuments. Once you go out and replant Pinot Grigio, the history is gone."

Of course, Gallo and Constellation have a sound business reason for urging farmers to replant: some of Lodi's best old vineyards don't really pay for themselves. Gnekow makes a wine called Old Ghost for Klinker Brick Winery from a 90-year-old vineyard that produces just half a ton per acre.

The owner, an 87-year-old woman in a nursing home, doesn't want to sell the vineyard, Gnekow says, but her family does, and even charging $35 a bottle for the wine doesn't give Klinker Brick owner Steve Felten enough potential income to buy it.

"We can keep making the wine as long as she's alive," Gnekow says. "We'll have to keep her on life support."

Finding a solution

Charging more money for wines isn't a potential solution to Lodi's current travails, because Lodi wines are most appealing to shoppers when they're under $20, says Ferry Plaza Wine Merchant managing partner Peter Granoff.

It's no coincidence that Michael-David's popular 7 Deadly Zins wine costs $17. The Phillips brothers have been as savvy about pricing as every other aspect of marketing. They've also been instrumental in getting Lodi on the world's wine radar, but it happened almost by accident.

The family has been farming the same land since 1860, running the kind of multicrop farm that's common in Lodi: 350 acres of tomatoes, green beans, sweet corn, peaches, plums, apricots, lavender -- and wine grapes. Wine grapes have usually been a moneymaker, but David Phillips says that during an industry downturn 25 years ago, the diversity kept the business going.

"In the early '80s, grape prices were so bad that selling fruits and vegetables at farmers' markets in Berkeley and San Rafael saved the farm," he says.

In 1984, the Phillipses, who have long operated a fruit stand on Highway 12, were mainly selling their grapes at rock-bottom rates to Sutter Home.

"We thought we might as well make a little wine in the barn in back," he says. "From '84 to '97 we just chugged along, making maybe a thousand cases a year."

Then in the spring of 1997, the Phillipses got a visit from Gnekow.

"Barry told us we weren't getting the right price for our grapes," Phillips says.

The Phillips brothers hired Gnekow as a consultant -- the first Lodi winery to do so. They quadrupled production in three years, but were still a tiny winery making 4,000 cases annually in 2000 when David Phillips had a flash of marketing genius.

"Our family didn't inherit any old-vine Zinfandel. Our cousin had some, and we bought some more," he says. "We had seven different lots of Zinfandel. My brother said, 'Why don't we blend them all together?' I had a Catholic-school flashback: the seven deadly Zins. We had no idea how big a hit that would be."

Bada-bing! While their neighbors may have felt Envy, the Phillips brothers showed little Sloth as the brand quickly shot up to selling 200,000 cases, mostly in the Midwest.

"We get e-mails every day from Missouri and Nebraska saying, 'I've found the wine I'm going to drink the rest of my life'," Phillips says. "Wisconsin and Iowa really like us. We have a flavor profile that fits there."

Phillips says that when Midwestern visitors stop by the fruit stand, cafe and bakery (which serves great apricot pie) to see where their favorite wine comes from, they like it even more.

But Lodi can support only so many fruit stands. So what's a farmer to do?

Follow in the footsteps of the Phillipses. The Mettler and Lange families could tell nearly the same story. The Mettlers have been growing grapes and other crops for eight generations; they sell their grapes to 10 different wineries. They used to run a fruit stand in front of the farm. Now, advised by Gnekow, they make 5,000 cases of their own wine, including a Cabernet Sauvignon that's one of the best wines from the area.

"When I was in college, the professor said, 'You can't grow Cabernet in Lodi,' " says patriarch Larry Mettler. "We haven't been getting our due for the quality of grapes here."

Winegrower Schatz also opened his own winery, Peltier Station, starting with a $2 million investment in equipment.

"You take more of the risk, you put more resources into it," Schatz says. "You don't sleep as well at night."

Owners of one of the area's largest vineyard management companies, as well as 1,600 acres of their own, Randall and Bradford Lange started LangeTwins winery this year, recruiting former Woodbridge director of winemaking Akiyoshi as winemaker.

"The depth and the heart and the soul of this district are the farm families," Randall Lange says. "When you drive around this district you see some big corporate wineries. But we're real people here."

Much as Mondavi encouraged his Oakville neighbors to join him in Napa's quality revolution, the Phillips brothers are glad to see their farming brethren with their names on the front of wine bottles.

"I'm hoping the Lange twins will get up to our speed fast," David Phillips says. "I need more Lodi people on the road. We have three times the grapes here as the whole state of Washington. We need to be promoting Lodi. I want to save this land here. I hate to see grapes torn up and replaced by strip malls."

Editor's note: Corrections have been made to the above story.

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